EXHIBIT 13.6

                           METROPOLITAN EDISON COMPANY

                        2001 ANNUAL REPORT TO STOCKHOLDERS



        Metropolitan Edison Company is a wholly owned electric utility operating
subsidiary  of  FirstEnergy  Corp.  It engages in the  distribution  and sale of
electric  energy  in an area of  approximately  3,300  square  miles in  eastern
Pennsylvania.  It also engages in the sale, purchase and interchange of electric
energy with other  electric  companies.  The area it serves has a population  of
approximately 1.3 million.

        In August 2000, FirstEnergy entered into an agreement to merge with GPU,
Inc.,  under which  FirstEnergy  would acquire all of the outstanding  shares of
GPU, Inc.'s common stock for approximately  $4.5 billion in cash and FirstEnergy
common  stock.  The merger  became  effective  on  November 7, 2001 and is being
accounted for by the purchase method.  Prior to that time,  Metropolitan  Edison
Company was a wholly owned subsidiary of GPU, Inc.






Contents                                                                Page
--------                                                                ----

Selected Financial Data...........................................       1
Management's Discussion and Analysis..............................      2-7
Consolidated Statements of Income.................................       8
Consolidated Balance Sheets.......................................       9
Consolidated Statements of Capitalization.........................      10
Consolidated Statements of Common Stockholder's Equity............      11
Consolidated Statements of Preferred Stock........................      11
Consolidated Statements of Cash Flows.............................      12
Consolidated Statements of Taxes..................................      13
Notes to Consolidated Financial Statements........................     14-21
Reports of Independent Public Accountants.........................     22-23

<PAGE>
<TABLE>

                                                 METROPOLITAN EDISON COMPANY

                                                   SELECTED FINANCIAL DATA

<CAPTION>
                                                                                           Years Ended December 31,
                                                     Nov. 7 -     Jan. 1 -     -----------------------------------------------
                                                 Dec. 31, 2001  Nov. 6, 2001     2000        1999         1998         1997
------------------------------------------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)

<S>                                               <C>           <C>          <C>          <C>          <C>         <C>
Operating Revenues..............................  $  143,760 |  $   824,556  $  842,333   $  902,827   $  919,594  $  943,109
                                                  ========== |  ===========  ==========   ==========   =========== ==========
                                                             |
Operating Income................................  $   17,367 |  $   102,247  $  135,211   $  154,774   $  124,447  $  150,151
                                                  ========== |  ===========  ===========  ==========   ==========  ==========
                                                             |
Income Before Extraordinary Item................  $   14,617 |  $    62,381  $   81,895   $   95,123   $   57,720  $   93,517
                                                  ========== |  ===========  ==========   ==========   ==========  ==========
                                                             |
Net Income......................................  $   14,617 |  $    62,381  $   81,895   $   95,123   $   50,915  $   93,517
                                                  ========== |  ============ ==========   ==========   ==========  ==========
                                                             |
Earnings on Common Stock........................  $   14,617 |  $    62,381  $   81,895   $   94,515   $   50,432  $   93,034
                                                  ========== |  ============ ==========   ==========   ==========  ==========
                                                             |
Total Assets....................................  $3,607,187 |               $2,708,062   $2,747,059   $3,347,822  $2,419,509
                                                  ========== |               ==========   ==========   ==========  ==========
                                                             |
                                                             |
Capitalization:                                              |
Common Stockholder's Equity.....................  $1,288,953 |               $  537,013  $   501,417   $  687,059  $  717,594
Cumulative Preferred Stock......................      --     |                    --           --          12,056      12,056
Company-Obligated Mandatorily Redeemable                     |
    Preferred Securities........................      --     |                    --           --         100,000     100,000
Company-Obligated Trust Preferred Securities....      92,200 |                  100,000      100,000        --          --
Long-Term Debt..................................     583,077 |                  496,860      496,883      546,904     576,924
                                                  ---------- |               ----------   ----------   ----------  ----------
Total Capitalization............................  $1,964,230 |               $1,133,873   $1,098,300   $1,346,019  $1,406,574
                                                  ========== |               ==========   ==========   ==========  ==========
                                                             |
                                                             |
Capitalization Ratios:                                       |
Common Stockholder's Equity.....................        65.6%|                     47.4%        45.7%        51.1%       51.0%
Cumulative Preferred Stock......................         --  |                      --           --           0.9         0.9
Company-Obligated Mandatorily Redeemable                     |
   Preferred Securities.........................         --  |                      --           --           7.4         7.1
Company-Obligated Trust Preferred Securities....         4.7 |                      8.8          9.1          --          --
Long-Term Debt..................................        29.7 |                     43.8         45.2         40.6        41.0
                                                       ----- |                    -----        -----        -----       -----
Total Capitalization............................       100.0%|                    100.0%       100.0%       100.0%      100.0%
                                                       ===== |                    =====        =====        =====       =====
                                                             |
                                                             |
Transmission and Distribution                                |
Kilowatt-Hour Deliveries (Millions):                         |
Residential.....................................         793 |        3,712       4,377        4,265        4,040       4,034
Commercial......................................         652 |        3,203       3,699        3,488        3,321       3,209
Industrial......................................         662 |        3,506       4,412        4,085        4,174       4,098
Other...........................................           6 |           27          38          107          110         116
                                                       ----- |       ------     -------       ------       ------      ------
Total Retail....................................       2,113 |       10,448      12,526       11,945       11,645      11,457
Total Wholesale.................................         195 |        1,067       2,120        4,597        1,249       1,024
                                                       ----- |       ------     -------       -------      ------      ------
Total...........................................       2,308 |       11,515      14,646       16,542       12,894      12,481
                                                       ===== |       ======     =======       ======       ======      ======
                                                             |
                                                             |
Transmission and Distribution Deliveries                     |
Customers Served:                                            |
Residential.....................................     442,763 |                  436,573      430,746      425,431     421,413
Commercial......................................      57,278 |                   56,080       54,969       53,764      52,821
Industrial......................................       1,961 |                    1,967        2,073        2,090       2,107
Other...........................................         819 |                      810        1,057        1,063       1,060
                                                     ------- |                  -------      -------      -------     -------
Total...........................................     502,821 |                  495,430      488,845      482,348     477,401
                                                     ======= |                  =======      =======      =======     =======

</TABLE>
                                       1

<PAGE>

                           METROPOLITAN EDISON COMPANY

                     Management's Discussion and Analysis of
                  Results of Operations and Financial Condition


        This discussion includes forward-looking statements based on information
currently  available  to  management  that  is  subject  to  certain  risks  and
uncertainties.  Such statements  typically contain,  but are not limited to, the
terms anticipate, potential, expect, believe, estimate and similar words. Actual
results  may  differ  materially  due to  the  speed  and  nature  of  increased
competition  and  deregulation  in the electric  utility  industry,  economic or
weather  conditions  affecting future sales and margins,  changes in markets for
energy services,  changing energy and commodity  market prices,  legislative and
regulatory   changes  (including  revised   environmental   requirements),   the
availability and cost of capital,  ability to accomplish or realize  anticipated
benefits from strategic initiatives and other similar factors.


Results of Operations
---------------------

        Earnings on common stock  decreased  6.0% to $77.0  million in 2001 from
$81.9 million in 2000. Results in 2001 were unfavorably affected by higher other
operating costs and slightly  higher net interest  charges  partially  offset by
greater operating revenues. In 2000, earnings on common stock decreased 13.4% to
$81.9  million  from $94.5  million  in 1999  primarily  due to lower  operating
revenues and greater  purchased power costs,  partially  offset by lower nuclear
and other operating costs and net interest charges.

        Operating revenues increased by $126.0 million in 2001 following a $60.5
million  decrease in 2000. The sources of changes in operating  revenues  during
2001 and 2000,  as compared to the prior year,  are  summarized in the following
table.

            Sources of Revenue Changes                  2001       2000
            ---------------------------------------------------------------
                 Increase (Decrease)                    (In millions)

            Change in kilowatt-hour sales due
              to level of retail customers
              shopping for generation service.......... $142.6    $   0.6
            Increase in other retail
              kilowatt-hour sales......................    8.2       32.1
            Decrease in wholesale sales................   (9.4)     (92.9)
            All other changes..........................  (15.4)      (0.3)
            ---------------------------------------------------------------

            Net Increase (Decrease) in
              Operating Revenues....................... $126.0     $(60.5)
            ===============================================================

Electric Sales

        In 2001, a major  source of the  increase in operating  revenues was the
increase  in retail  generation  kilowatt-hour  sales  due to a large  number of
customers  returning to us in 2001 as full service  customers,  after  receiving
their power from  alternate  suppliers in 2000.  In 2001,  83.5% of total retail
sales were to full service  customers as compared to 57.5% in 2000. Total retail
sales were relatively  flat, with increases in residential and commercial  sales
being offset by a decrease in industrial sales.

        The  primary  source of the  decrease  in  operating  revenues  in 2000,
compared to the prior year, was lower sales to the wholesale market, as a result
of us  having  additional  power  available  in  1999  due to the  delay  of the
divestiture of our generating  assets.  Partially  offsetting that decrease were
higher  residential,  commercial and industrial sales, all due to greater usage.
The number of residential  and commercial  customers also increased in 2000 over
1999.  Changes in  kilowatt-hour  sales by  customer  class in 2001 and 2000 are
summarized in the following table:

            Changes in Kilowatt-hour Sales  2001         2000
            -------------------------------------------------
               Increase (Decrease)

            Residential..................   2.9%         2.6%
            Commercial...................   4.2%         6.0%
            Industrial...................  (5.5)%        8.0%
            --------------------------------------------------

            Total Retail.................   0.3%         4.9%
            Wholesale.................... (40.5)%      (53.9)%
            --------------------------------------------------

            Total Sales..................  (5.6)%      (11.5)%
            --------------------------------------------------

                                       2
<PAGE>

Operating Expenses and Taxes

        Total  operating  expenses and taxes  increased  $141.6  million in 2001
after  decreasing  $40.9  million in 2000,  compared to the  preceding  year. An
increase in purchased power and other operating costs accounted for the majority
of the increase in 2001.  Purchased power costs also increased  significantly in
2000  compared to 1999,  but were  partially  offset by lower  nuclear and other
operating costs.

        Purchased  power costs increased $91.2 million in 2001 compared to 2000.
The change was due to increased  amounts of power  purchased  through  two-party
agreements and the PJM Power Pool to meet higher demand resulting from customers
returning to us in 2001 after receiving their power from alternate  suppliers in
2000. The average price of power under the two-party  agreements was also higher
in 2001 than it was in 2000.  Offsetting  these  increases was the effect of the
Pennsylvania Public Utility  Commission's (PPUC) June 2001 order that allowed us
to defer,  for future  recovery  from  customers,  energy costs in excess of our
fixed  generation  tariff rates,  retroactive  to January 1, 2001, in connection
with our provider of last resort (PLR) obligation.

        In 2000, fuel and purchased  power costs  increased  $246.1 million over
1999. Much of the increase was due to the need to purchase  substantially all of
our energy  requirements  following the sales of generating  assets in 1999, and
the absence of deferred  accounting  treatment  for these costs.  An  offsetting
decrease in fuel costs also resulted from the sales of  generating  assets.  The
sale of Unit 1 of the Three Mile Island  Nuclear  Plant,  completed  in December
1999, eliminated essentially all of our nuclear operating costs in 2000.

        Other operating costs increased $47.8 million in 2001 as compared to the
prior year.  The  majority of the  increase  was due to the absence in 2001 of a
pension  curtailment  gain  associated with employees who were terminated at the
time of the sale of our generating  assets.  This gain was realized in 2000 as a
result of the PPUC's Phase II Order. Other operating costs also increased due to
costs  related to  Voluntary  Enhanced  Retirement  Programs  offered to certain
bargaining unit  employees.  In 2000,  other  operating  costs decreased  $183.3
million  from 1999.  The reason for the  decline  was a  reduction  in  expenses
associated  with  the  operation  of  generating  stations  due to the  sale  of
essentially all of our remaining generating assets in 1999. Operating costs were
also  reduced by the  pension  curtailment  gain  discussed  above.  The sale of
generating  assets  in 1999 was also the cause for a  decrease  in  depreciation
expense of $20.3 million in 2000 from the previous year.

Other Income

         Other  income  increased  by  $11.9  million  in 2001  compared  to the
previous  year.  The increase was due to higher  competitive  transition  charge
interest  income and the absence in 2001 of the write-down of regulatory  assets
for Unit 2 of the Three  Mile  Island  Nuclear  Plant  (TMI-2)  decommissioning,
representing the net realized gain previously  recorded on the  accident-related
portion of the TMI-2  decommissioning  trust.  Offsetting  these increases was a
charge for a  sustainable  energy fund in  accordance  with the  Stipulation  of
Settlement related to the merger of FirstEnergy and GPU, Inc.

Net Interest Charges

        Net interest charges  increased by $1.2 million in 2001 after decreasing
$6.1 million in 2000 compared to the prior year.  In 2001,  the increase was due
to the  September  issuance  of $100  million of senior  notes.  In 2000,  lower
interest  charges were due to the  redemption  of $50 million of first  mortgage
bonds (FMB) in 2000,  and the  redemption  of $100 million of company  obligated
mandatorily  redeemable preferred securities in 1999. Partially offsetting these
reductions were increased  preferred  dividends  associated with the issuance of
$100 million of company obligated preferred securities in 1999.


Capital Resources and Liquidity
-------------------------------

        We had approximately $25.3 million of cash and temporary investments and
$72 million of short-term  indebtedness on December 31, 2001. We may borrow from
our  affiliates  on a  short-term  basis.  We will not issue  FMBs other than as
collateral for senior notes, since our senior note indentures  prohibit (subject
to certain  exceptions)  us from  issuing any debt which is senior to the senior
notes.  As of December 31, 2001,  we had the  capability to issue $88 million of
additional  senior notes based upon FMB  collateral.  We have no restrictions on
the issuance of preferred stock.

        At the end of 2001, our common equity as a percentage of  capitalization
stood at 66% compared to 47% at the end of 2000. This increase resulted from the
allocation of the purchase price in the merger between FirstEnergy and GPU.

        Following  approval  of the  merger  of  FirstEnergy  and GPU by the New
Jersey  Board of Public  Utilities on  September  26, 2001,  Standard and Poor's
adjusted our corporate credit rating from A/A-1 to BBB/A-2, and our senior

                                       3
<PAGE>

secured debt rating from A+ to BBB+. The lower credit ratings reflect Standard &
Poor's consolidated  rating methodology,  which resulted in essentially the same
corporate  credit rating for all of  FirstEnergy's  electric  utility  operating
companies. The credit rating outlook of Standard & Poor's is stable. On February
22, 2002,  Moody's announced a change in its outlook for our credit ratings from
stable  to  negative  based  upon  a  decision  by  the  Commonwealth  Court  of
Pennsylvania  to  reverse  the  PPUC's  decision  to grant us rate  relief  (see
Regulatory Matters).

        Our cash  requirements  in 2002  for  operating  expenses,  construction
expenditures,  scheduled debt  maturities and preferred  stock  redemptions  are
expected  to be  met  without  increasing  our  net  debt  and  preferred  stock
outstanding.   Major  contractual  obligations  for  future  cash  payments  are
summarized in the following table:

Contractual Obligations   2002   2003    2004   2005    2006 Thereafter Total
-----------------------------------------------------------------------------
                                             (In millions)

Long-term debt.......... $ 30  $ 90      $ 40   $ 51    $151   $  235   $  597
Mandatory preferred
  stock.................                                          100      100
Operating leases .......    1     1        --     --      --       15       17
Unconditional power
  purchases.............  365   227       157    160     165    1,410    2,484
------------------------------------------------------------------------------
                         $396  $318      $197   $211    $316   $1,760   $3,198
==============================================================================

        Our capital  spending  for the period  2002-2006 is expected to be about
$323 million, of which approximately $66 million applies to 2002.


Market Risk Information
-----------------------

        We use various market risk sensitive  instruments,  including derivative
contracts,  primarily  to manage the risk of price.  Our Risk Policy  Committee,
comprised of  FirstEnergy  executive  officers,  exercises an  independent  risk
oversight function to ensure compliance with corporate risk management  policies
and prudent risk management practices.

Commodity Price Risk

        We  are  exposed  to  market  risk  primarily  due  to  fluctuations  in
electricity and natural gas prices.  To manage the volatility  relating to these
exposures,  we use a variety of derivative  instruments,  including  options and
futures contracts.  These derivatives are used principally for hedging purposes.
The change in the fair value of commodity derivative contracts related to energy
production during 2001 is summarized in the table below:

  Increase (Decrease)in the Fair Value of Commodity Derivative Contracts

                                  Nov. 7 - Dec. 31  Jan.  1 -  Nov. 6
                                        2001               2001
  -------------------------------------------------------------------
                                             (In millions)
  Outstanding as of beginning of
    period with SFAS 133
    cumulative adjustment.............  $6.6              $26.0
  Contract value when entered.........   0.3                5.2
  Decrease in value of existing
    contracts.........................  (4.5)              (2.9)
  Change in techniques/assumptions....   --               (21.3)
  Settled contracts...................  (0.1)              (0.4)
  -------------------------------------------------------------------
  Outstanding as of end of period.....  $2.3               $6.6
  ===================================================================


        While the  valuation of  derivative  contracts is always based on active
market prices when they are available, longer-term contracts can require the use
of  model-based  estimates  of  prices  in later  years  due to the  absence  of
published  market prices.  Currently,  substantially  all of our derivatives are
valued based on active market prices.

        We perform  sensitivity  analyses to estimate our exposure to the market
risk of our  commodity  position.  A  hypothetical  10% adverse  shift in quoted
market prices in the near term on our derivative  instruments would not have had
a material  effect on our  consolidated  financial  position or cash flows as of
December 31, 2001.

Interest Rate Risk

        Our exposure to fluctuations in market interest rates is reduced since a
significant  portion of our debt has fixed interest rates, as noted in the table
below. We are subject to the inherent interest rate risks related to refinancing
maturing debt by issuing new debt securities. Changes in the market value of our
nuclear  decommissioning  trust  funds are  recognized  by making  corresponding
changes  to  the  decommissioning  liability,  as  described  in  Note  1 to the
consolidated financial statements.

                                       4
<PAGE>

Comparison of Carrying Value to Fair Value
--------------------------------------------------------------------------------
                                                            There-         Fair
                       2002   2003    2004   2005    2006   after   Total  Value
--------------------------------------------------------------------------------
                                            (Dollars in millions)
Investments other
  than Cash and Cash
  Equivalents:
Fixed Income........... --      --     --     --      --   $  68   $  68  $  67
  Average interest
    rate...............                                      4.7%    4.7%
--------------------------------------------------------------------------------
________________________________________________________________________________
Liabilities
-------------------------------------------------------------------------------
Long-term Debt:
Fixed rate.............$30     $90    $40    $51    $151    $235    $597   $601
  Average interest
    rate...............8.1%    7.7%   6.3%   7.0%    5.9%    7.6%    7.1%
Variable rate..........
  Average interest
    rate...............
Short-term Borrowings..$72      --     --     --      --      --    $ 72   $ 72
  Average interest
    rate...............4.9%                                          4.9%
--------------------------------------------------------------------------------
Preferred Stock........ --      --     --     --      --    $100    $100   $ 93
  Average dividend
    rate...............                                      7.4%    7.4%
--------------------------------------------------------------------------------


Outlook
-------

        Our industry continues to transition to a more competitive  environment.
As of January 1, 1999,   our  customers  could select  alternative  energy
suppliers.  We continue  to deliver  power to homes and  businesses  through our
existing  distribution system, which remains regulated.  The PPUC authorized our
rate  restructuring  plan,   establishing  separate  charges  for  transmission,
distribution,  generation and stranded cost recovery, which is recovered through
a competitive  transition charge (CTC).  Customers electing to obtain power from
an  alternative  supplier  have  their  bills  reduced  based  on the  regulated
generation  component,  and the customers  receive a generation  charge from the
alternative  supplier.  We have a continuing  responsibility to provide power to
those  customers  not  choosing  to  receive  power from an  alternative  energy
supplier, subject to certain limits, which is referred to as our PLR obligation.

Regulatory Matters

        In June 2001, we entered into a settlement  agreement with major parties
in the  combined  merger and rate  proceedings  that,  in addition to  resolving
certain issues  concerning the PPUC's  approval of our merger with  FirstEnergy,
also addressed our request for PLR relief. We are permitted to defer, for future
recovery,  the difference between our actual energy costs and those reflected in
our capped  generation  rates.  Those costs will continue to be deferred through
December 31, 2005.  If energy  costs  incurred  during that period are below our
capped  generation rates, the difference would be used to reduce our recoverable
deferred costs.  Our PLR obligation was extended  through December 31, 2010. Our
CTC revenues  will be applied first to PLR costs,  then to stranded  costs other
than for non-utility  generation (NUG) and finally to NUG stranded costs through
December 31, 2010. We would be permitted to recover any remaining stranded costs
through a  continuation  of the CTC  after  December  31,  2010;  however,  such
recovery  would  extend to no later than  December  31,  2015.  Any  amounts not
expected to be  recovered  by December 31, 2015 would be written off at the time
such  nonrecovery  becomes  probable.  Several  parties had  appealed  this PPUC
decision to the Commonwealth  Court of  Pennsylvania.  On February 21, 2002, the
Court affirmed the PPUC decision regarding approval of the merger, remanding the
decision to the PPUC only with respect to the issue of merger savings. The Court
reversed  the  PPUC's  decision  regarding  our PLR  obligation,  and denied our
related requests for rate relief. We are considering our response to the Court's
decision,  which could include asking the  Pennsylvania  Supreme Court to review
the decision. We are unable to predict the outcome of these matters.

Supply Plan

        As  part  of  our  Restructuring  Order,  we  are  obligated  to  supply
electricity  to  customers  who do not choose an alternate  supplier.  The total
forecasted  peak of this obligation in 2002 is 2,500 megawatts (MW). Our current
supply portfolio contains approximately 300 MW of long-term purchases from NUGs,
and the  remaining  obligation is expected to be met through a mix of multi-year
forward  purchases,  short-term  forward (less than one year) purchases and spot
market purchases.

Environmental Matters

        Various   environmental   liabilities   have  been   recognized  on  the
Consolidated  Balance  Sheet as of December 31, 2001,  based on estimates of the
total costs of cleanup, our proportionate  responsibility for such costs and the
financial ability of other nonaffiliated  entities to pay. We have been named as
a  "potentially  responsible  party"  (PRP) at waste  disposal  sites  which may
require cleanup under the Comprehensive Environmental Response, Compensation and
Liability  Act of 1980.  Allegations  of disposal  of  hazardous  substances  at
historical sites, and the liability involved, are

                                       5

<PAGE>

often unsubstantiated and subject to dispute. Federal law provides that all PRPs
for a particular site be held liable on a joint and several basis. We have total
accrued  liabilities  aggregating  approximately $0.1 million as of December 31,
2001.  We do not believe  environmental  remediation  costs will have a material
adverse effect on our financial condition, cash flows or results of operations.

Legal Matters

        Various lawsuits,  claims and proceedings related to our normal business
operations  are pending  against us, the most  significant of which is described
below.

        We have a 50% ownership  interest in TMI-2,  which was damaged  during a
1979 accident.  As a result of the accident,  claims for alleged personal injury
were filed  against  us,  Jersey  Central  Power & Light  Company,  Pennsylvania
Electric  Company and GPU in the U.S.  District Court for the Middle District of
Pennsylvania.  In 1996, the District Court granted a motion for summary judgment
filed by the  defendants  and  dismissed  the ten initial "test cases" which had
been  selected  for a test case  trial,  as well as all of the  remaining  2,100
pending  claims.  In  November  1999,  the U.S.  Court of Appeals  for the Third
Circuit affirmed the District  Court's  dismissal of the ten test cases, but set
aside the dismissal of the  additional  pending  claims,  remanding  them to the
District  Court for further  proceedings.  Following the  resolution of judicial
proceedings  dealing with admissible  evidence,  we have again requested summary
judgment of the  remaining  2,100 claims in the District  Court.  On January 15,
2002,  the  District  Court  granted  our  motion.  On February  14,  2002,  the
plaintiffs  filed a notice of appeal of this  decision (see Note 6 - Other Legal
Proceedings).  Although  unable to predict  the outcome of this  litigation,  we
believe  that any  liability to which we might be subject by reason of the TMI-2
accident will not exceed our financial protection under the Price-Anderson Act.


Significant Accounting Policies
-------------------------------

        We prepare our  consolidated  financial  statements in  accordance  with
accounting  principles  generally accepted in the United States.  Application of
these  principles  often  requires  a high  degree of  judgment,  estimates  and
assumptions that affect our financial results.  All of our assets are subject to
their own specific  risks and  uncertainties  and are  continually  reviewed for
impairment.  Assets related to the  application of the policies  discussed below
are  similarly  reviewed  with their risks and  uncertainties  reflecting  these
specific factors. Our more significant accounting policies are described below:

Purchase Accounting

          On November 7, 2001, the merger between FirstEnergy and GPU became
effective, and we became a wholly owned subsidiary of FirstEnergy. The merger
was accounted for by the purchase method of accounting, which requires judgment
regarding the allocation of the purchase price based on the fair values of the
assets acquired (including intangible assets) and the liabilities assumed. The
fair values of the acquired assets and assumed liabilities were based primarily
on estimates. The adjustments reflected in our records, which are subject to
adjustment in 2002 when finalized, primarily consist of: (1) revaluation of
certain property, plant and equipment; (2) adjusting preferred stock subject to
mandatory redemption and long-term debt to estimated fair value; (3) recognizing
additional obligations related to retirement benefits; and (4) recognizing
estimated severance and other compensation liabilities. The excess of the
purchase price over the estimated fair values of the assets acquired and
liabilities assumed was recognized as goodwill, which will be reviewed for
impairment at least annually. As of December 31, 2001, we had recorded goodwill
of approximately $784.4 million related to the merger.

Regulatory Accounting

        We are  subject  to  regulation  that  sets the  prices  (rates)  we are
permitted to charge our customers  based on costs that the  regulatory  agencies
determine we are permitted to recover.  At times,  regulators  permit the future
recovery through rates of costs that would be currently charged to expense by an
unregulated  company.  This  rate-making  process  results in the  recording  of
regulatory assets based on anticipated  future cash inflows.  As a result of the
changing  regulatory   framework  in  Pennsylvania,   a  significant  amount  of
regulatory assets have been recorded. As of December 31, 2001, we had regulatory
assets of $1.3  billion.  We  continually  review  these  assets to assess their
ultimate  recoverability within the approved regulatory  guidelines.  Impairment
risk  associated with these assets relates to potentially  adverse  legislation,
judicial or regulatory actions in the future.

Derivative Accounting

        Determination  of appropriate  accounting  for  derivative  transactions
requires the involvement of management representing operations, finance and risk
assessment.  In order to determine the  appropriate  accounting  for  derivative
transactions,  the  provisions of the contract need to be carefully  assessed in
accordance  with  the  authoritative   accounting  literature  and  management's
intended use of the derivative.  New authoritative  guidance  continues to shape
the  application  of  derivative  accounting.   Management's   expectations  and
intentions are key factors in determining the


                                       6
<PAGE>

appropriate  accounting  for a  derivative  transaction  and, as a result,  such
expectations  and intentions must be documented.  Derivative  contracts that are
determined  to fall  within  the  scope of  Statement  of  Financial  Accounting
Standards  (SFAS) No.  133,  as  amended,  must be recorded at their fair value.
Active market prices are not always available to determine the fair value of the
later years of a contract,  requiring that various  assumptions and estimates be
used in their  valuation.  We continually  monitor our  derivative  contracts to
determine if our activities, expectations, intentions, assumptions and estimates
remain  valid.  As part of our  normal  operations  we  enter  into  commodities
contracts, which increase the impact of derivative accounting judgments.

Revenue Recognition

        We follow the accrual  method of accounting  for  revenues,  recognizing
revenue for  kilowatt-hours  that have been delivered but not yet billed through
the end of the year. The determination of unbilled revenues requires  management
to make various estimates including:

     -    Net energy purchased or generated for retail load
     -    Losses of energy over distribution lines
     -    Mix of kilowatt-hour  usage by residential,  commercial and industrial
          customers
     -    Kilowatt-hour   usage  of   customers   receiving   electricity   from
          alternative suppliers


Recently Issued Accounting Standards
------------------------------------

          The Financial Accounting Standards Board (FASB) approved SFAS 141,
"Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets,"
on June 29, 2001. SFAS 141 requires that all business combinations initiated
after June 30, 2001 be accounted for using purchase accounting. The provisions
of the new standard relating to the determination of goodwill and other
intangible assets have been applied to our 2001 merger, which was accounted for
as a purchase transaction. Under SFAS 142, amortization of existing goodwill
will cease January 1, 2002. Instead, goodwill will be tested for impairment at
least on an annual basis, and no impairment of goodwill is anticipated as a
result of a preliminary analysis. We did not have any goodwill prior to our 2001
merger, and we did not amortize goodwill associated with the merger under the
provisions of the new standard.

        In July 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations."  The new statement  provides  accounting  standards for retirement
obligations  associated with tangible  long-lived assets, with adoption required
by January 1, 2003.  SFAS 143 requires that the fair value of a liability for an
asset  retirement  obligation be recorded in the period in which it is incurred.
The associated  asset  retirement  costs are capitalized as part of the carrying
amount of the long-lived  asset. Over time the capitalized costs are depreciated
and the present value of the asset retirement liability increases,  resulting in
a period expense.  Upon retirement,  a gain or loss will be recorded if the cost
to settle the retirement  obligation  differs from the carrying  amount.  We are
currently  assessing the new standard and have not yet  determined the impact on
our financial statements.

        In  September  2001,  the FASB  issued  SFAS  144,  "Accounting  for the
Impairment or Disposal of  Long-Lived  Assets."  SFAS 144  supersedes  SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." The Statement  also  supersedes  the  accounting  and reporting
provisions of APB 30. Our adoption of this Statement, effective January 1, 2002,
will  result in our  accounting  for any  future  impairments  or  disposals  of
long-lived  assets  under the  provisions  of SFAS 144,  but will not change the
accounting   principles  used  in  previous  asset   impairments  or  disposals.
Application of SFAS 144 is not  anticipated to have a major impact on accounting
for impairments or disposal  transactions  compared to the prior  application of
SFAS 121 or APB 30.

                                       7

<PAGE>
<TABLE>

                                                   METROPOLITAN EDISON COMPANY

                                                CONSOLIDATED STATEMENTS OF INCOME


<CAPTION>

                                                                 Nov 7 -         Jan. 1 -    For the Years Ended Dec. 31,
                                                              Dec. 31, 2001   Nov. 6, 2001        2000         1999
------------------------------------------------------------------------------------------------------------------------
                                                                                  (In thousands)

<S>                                                             <C>             <C>             <C>          <C>
OPERATING REVENUES........................................      $ 143,760   |   $824,556        $842,333     $902,827
                                                                ---------   |   --------        --------     --------
                                                                            |
OPERATING EXPENSES AND TAXES:                                               |
   Fuel and purchased power...............................         83,275   |    478,954         471,070      224,931
   Nuclear operating costs................................          --      |      --              --          61,170
   Other operating costs..................................         16,122   |    123,094          91,456      274,743
                                                                ---------   |   --------        --------     --------
     Total operation and maintenance expenses.............         99,397   |    602,048         562,526      560,844
   Provision for depreciation and amortization............          8,903   |     51,867          68,695       88,989
   General taxes..........................................          6,509   |     39,845          42,623       39,283
   Income taxes...........................................         11,584   |     28,549          33,278       58,937
                                                                ---------   |   --------        --------     --------
     Total operating expenses and taxes...................        126,393   |    722,309         707,122      748,053
                                                                ---------   |   --------        --------     --------
                                                                            |
OPERATING INCOME..........................................         17,367   |    102,247         135,211      154,774
                                                                            |
OTHER INCOME..............................................          5,465   |      7,807           1,387        1,143
                                                                ---------   |   --------        --------     --------
                                                                            |
INCOME BEFORE NET INTEREST CHARGES........................         22,832   |    110,054         136,598      155,917
                                                                ---------   |   --------        --------     --------
                                                                            |
NET INTEREST CHARGES:                                                       |
   Subsidiaries' preferred stock dividend requirements....          1,102   |      6,248           6,656       13,319
   Interest on long-term debt.............................          5,615   |     33,101          37,886       45,996
   Allowance for borrowed funds used during                                 |
     construction.........................................             30   |       (574)           (477)      (1,048)
   Deferred interest income...............................           (276)  |       (321)         --            --
   Other interest expense.................................          1,744   |      9,219          10,638        2,527
                                                                ---------   |   --------        --------     --------
   Net interest charges...................................          8,215   |     47,673          54,703       60,794
                                                                ---------   |   --------        --------     --------
                                                                            |
NET INCOME................................................         14,617   |     62,381          81,895       95,123
                                                                            |
PREFERRED STOCK DIVIDEND                                                    |
   REQUIREMENTS...........................................          --      |      --              --              66
                                                                            |
LOSS ON PREFERRED STOCK                                                     |
   REACQUISITION..........................................          --      |      --              --             542
                                                                ----------  |   --------        --------     --------
                                                                            |
EARNINGS ON COMMON STOCK..................................      $  14,617   |   $ 62,381        $ 81,895     $ 94,515
                                                                =========   |   ========        ========     ========


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

</TABLE>
                                       8
<PAGE>

<TABLE>

                                           METROPOLITAN EDISON COMPANY

                                           CONSOLIDATED BALANCE SHEETS
<CAPTION>

As of December 31,                                                                        2001             2000
------------------------------------------------------------------------------------------------------------------
                                                                                              (In thousands)
                                         ASSETS
UTILITY PLANT:
<S>                                                                                    <C>              <C>
   In service.....................................................................     $1,609,974   |   $1,561,848
   Less-Accumulated provision for depreciation....................................        530,006   |      489,607
                                                                                       ----------   |   ----------
                                                                                        1,079,968   |    1,072,241
                                                                                        ---------   |   ----------
   Construction work in progress-                                                                   |
     Electric plant...............................................................         14,291   |       22,437
                                                                                       -----------  |   ----------
                                                                                        1,094,259   |    1,094,678
                                                                                        ---------   |   ----------
OTHER PROPERTY AND INVESTMENTS:                                                                     |
   Nuclear plant decommissioning trusts...........................................        157,699   |      154,068
   Long-term notes receivable from associated companies...........................         12,418   |       12,418
   Other..........................................................................         13,391   |        4,472
                                                                                       ----------   |   ----------
                                                                                          183,508   |      170,958
                                                                                       ----------   |   ----------
CURRENT ASSETS:                                                                                     |
   Cash and cash equivalents......................................................         25,274   |        3,439
   Receivables-                                                                                     |
     Customers (less accumulated provisions of $12,271,000 and $13,004,000                          |
        respectively, for uncollectible accounts).................................        112,257   |      108,806
     Associated companies.........................................................          8,718   |       37,314
     Other........................................................................         16,675   |       28,525
   Prepayments and other..........................................................         12,239   |        7,555
                                                                                       ----------   |   ----------
                                                                                          175,163   |      185,639
                                                                                       ----------   |   ----------
DEFERRED CHARGES:                                                                                   |
   Regulatory assets..............................................................      1,320,412   |    1,224,370
   Goodwill.......................................................................        784,443   |       --
   Other..........................................................................         49,402   |       32,417
                                                                                       ----------   |   ----------
                                                                                        2,154,257   |    1,256,787
                                                                                       ----------   |   ----------
                                                                                       $3,607,187   |   $2,708,062
                                                                                       ==========   |   ==========
                           CAPITALIZATION AND LIABILITIES                                           |
                                                                                                    |
CAPITALIZATION (See Consolidated Statements of Capitalization):                                     |
   Common stockholder's equity....................................................     $1,288,953   | $    537,013
   Company - obligated trust preferred securities.................................         92,200   |      100,000
   Long-term debt.................................................................        583,077   |      496,860
                                                                                       ----------   |   ----------
                                                                                        1,964,230   |    1,133,873
                                                                                       ----------   |   ----------
CURRENT LIABILITIES:                                                                                |
   Currently payable long-term debt and preferred stock...........................         30,029   |           27
   Short-term borrowings (Note 5)-                                                                  |
     Associated companies.........................................................         72,011   |        --
     Other........................................................................          --      |       46,600
   Accounts payable-                                                                                |
     Associated companies.........................................................         67,351   |       69,462
     Other........................................................................         36,750   |       36,011
   Accrued  taxes.................................................................          7,037   |       20,768
   Accrued interest...............................................................         17,468   |       14,375
   Other..........................................................................         13,652   |       14,687
                                                                                       ----------   |   ----------
                                                                                          244,298   |      201,930
                                                                                       ----------   |   ----------
DEFERRED CREDITS:                                                                                   |
   Accumulated deferred income taxes..............................................        300,438   |      279,009
   Accumulated deferred investment tax credits....................................         13,310   |       14,159
   Power purchase contract loss liability.........................................        730,662   |      727,503
   Nuclear fuel disposal costs....................................................         36,906   |       35,456
   Nuclear plant decommissioning costs............................................        268,967   |      262,505
   Other..........................................................................         48,376   |       53,627
                                                                                       ----------   |   ----------
                                                                                        1,398,659   |    1,372,259
                                                                                       ----------   |   ----------
COMMITMENTS AND CONTINGENCIES                                                                       |
   (Notes 3 and 6)................................................................                  |
                                                                                       ----------   |   ----------
                                                                                       $3,607,187   |   $2,708,062
                                                                                       ==========   |   ==========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.

</TABLE>
                                       9
<PAGE>

<TABLE>

                                       METROPOLITAN EDISON COMPANY

                                CONSOLIDATED STATEMENTS OF CAPITALIZATION

<CAPTION>

As of December 31,                                                                            2001        2000
----------------------------------------------------------------------------------------------------------------
                             (Dollars in thousands, except per share amounts)

COMMON STOCKHOLDER'S EQUITY:
<S>                                                                                       <C>         <C>
   Common stock, without par value, authorized 900,000 shares
     859,500 shares outstanding........................................................   $1,274,325 |$   66,273
   Other paid-in capital..............................................................         --    |   400,200
   Accumulated other comprehensive income (Note 4E)....................................           11 |        64
   Retained earnings (Note 4A).........................................................       14,617 |    70,476
                                                                                          ---------- |----------
     Total common stockholder's equity.................................................    1,288,953 |   537,013
                                                                                          ---------- |----------
                                                                                                     |
COMPANY OBLIGATED TRUST                                                                              |
PREFERRED SECURITIES                                                                                 |
OF SUBSIDIARY TRUST                                                                                  |
(NOTE 4C):                                                                                           |
   7.35% due 2039......................................................................       92,200 |   100,000
                                                                                                     |
LONG-TERM DEBT (Note 4D):                                                                            |
   First mortgage bonds:                                                                             |
     8.05% due 2002....................................................................       30,000 |    30,000
     6.60% due 2003....................................................................       20,000 |    20,000
     7.22% due 2003....................................................................       40,000 |    40,000
     9.10% due 2003....................................................................       30,000 |    30,000
     6.34% due 2004....................................................................       40,000 |    40,000
     6.77% due 2005....................................................................       30,000 |    30,000
     7.35% due 2005....................................................................       20,000 |    20,000
     6.36% due 2006....................................................................       17,000 |    17,000
     6.40% due 2006....................................................................       33,000 |    33,000
     6.00% due 2008....................................................................        8,700 |     8,700
     6.10% due 2021....................................................................       28,500 |    28,500
     8.60% due 2022....................................................................       30,000 |    30,000
     8.80% due 2022....................................................................       30,000 |    30,000
     6.97% due 2023....................................................................       30,000 |    30,000
     7.65% due 2023....................................................................       30,000 |    30,000
     8.15% due 2023....................................................................       60,000 |    60,000
     5.95% due 2027....................................................................       13,690 |    13,690
                                                                                          ---------- |----------
       Total first mortgage bonds......................................................      490,890 |   490,890
                                                                                          ---------- |----------
                                                                                                     |
   Secured note:                                                                                     |
     5.72% due 2006....................................................................      100,000 |     --
                                                                                                     |
   Unsecured note:                                                                                   |
     7.69% due 2039....................................................................        5,997 |     6,024
                                                                                                     |
   Net unamortized premium(discount) on debt...........................................       16,219 |       (27)
                                                                                          ---------- |----------
   Long-term debt due within one year..................................................      (30,029)|       (27)
                                                                                          ---------- |----------
       Total long-term debt ...........................................................      583,077 |   496,860
                                                                                          ---------- |----------
TOTAL CAPITALIZATION...................................................................   $1,964,230 |$1,133,873
                                                                                          ========== |==========


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

</TABLE>
                                       10
<PAGE>

<TABLE>

                                                 METROPOLITAN EDISON COMPANY

                                    CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<CAPTION>
                                                                                  Common Stock                Accumulated
                                                                              --------------------   Other       Other
                                                               Comprehensive    Number    Carrying  Paid-In  Comprehensive Retained
                                                                   Income     of Shares     Value   Capital  Income (Loss) Earnings
                                                               -------------  ---------   --------  -------  ------------- ---------
                                                                                       (Dollars in thousands)

<S>              <C>                                              <C>          <C>       <C>       <C>           <C>       <C>
Balance, January 1, 1999................................                       859,500   $  66,273 $ 370,200     $16,520   $234,066
   Net income...........................................          $ 95,123                                                   95,123
   Net unrealized gains(loss) on investments............             4,315                                         4,315
   Minimum pension liability............................               528                                           528
                                                                  --------
   Comprehensive Income.................................            99,966
                                                                  --------
   Cash dividends on preferred stock....................                                                                        (66)
   Cash dividends on common stock.......................                                                                   (315,000)
   Contributions from parent company....................                                              30,000
   Loss on preferred stock reacquisition................                                                                       (542)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999..............................                       859,500      66,273   400,200      21,363     13,581
   Net income...........................................            81,895                                                   81,895
   Net unrealized gain (loss) on investments............           (21,295)                                      (21,295)
   Minimum pension liability............................                (4)                                           (4)
                                                                  --------
   Comprehensive Income.................................            60,596
                                                                  --------
   Cash dividends on common stock.......................                                                                    (25,000)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000..............................                       859,500      66,273   400,200          64     70,476
   Net income...........................................            62,381                                                   62,381
   Net unrealized gain (loss) on investments............                 5                                             5
   Net unrealized gain (loss) on derivative instruments.              (174)                                         (174)
                                                                  --------
   Comprehensive Income.................................            62,212
                                                                  --------
   Cash dividends on common stock.......................                                                                    (65,000)
   ---------------------------------------------------------------------------------------------------------------------------------
Balance, November 6, 2001...............................                       859,500      66,273   400,200        (105)    67,857
   Purchase accounting fair value adjustment............                                 1,208,052  (400,200)        105    (67,857)
____________________________________________________________________________________________________________________________________
Balance, November 7, 2001...............................                       859,500   1,274,325     --           --        --
   Net income...........................................            14,617                                                   14,617
   Net unrealized gain (loss) on investments............                22                                            22
   Net unrealized gain (loss) on derivative instruments.               (11)                                          (11)
                                                                  --------
   Comprehensive Income.................................          $ 14,628
                                                                  --------
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001..............................                       859,500  $1,274,325 $   --        $    11    $14,617
====================================================================================================================================


<CAPTION>

                                CONSOLIDATED STATEMENTS OF PREFERRED STOCK

                                                          Not Subject to              Subject to
                                                      Mandatory Redemption       Mandatory Redemption
                                                      --------------------       --------------------
                                                        Number    Carrying        Number      Carrying
                                                      of Shares     Value        of Shares      Value
                                                      ---------     -----        ---------      -----
                                                                   (Dollars in thousands)

             <S>                                       <C>        <C>           <C>           <C>
             Balance, January 1, 1999............      119,475    $12,056       4,000,000     $100,000
               Redemptions-
                 3.90% Series  ..................      (64,384)    (6,527)
                 4.35% Series....................      (22,517)    (2,256)
                 3.85% Series....................       (9,252)      (929)
                 3.80% Series....................       (7,982)      (807)
                 4.45% Series....................      (15,340)    (1,537)
                 9.00% Series....................                              (4,000,000)    (100,000)
               Issuance-
                 7.35% Series....................                               4,000,000      100,000
             -----------------------------------------------------------------------------------------
             Balance, December 31, 1999..........        --         --          4,000,000      100,000
             =========================================================================================
             Balance, December 31, 2000..........        --         --          4,000,000      100,000
             =========================================================================================
               Purchase accounting fair
                    value adjustment.............                                               (7,800)
             -----------------------------------------------------------------------------------------
             Balance, December 31, 2001..........        --       $ --         4,000,000    $  92,200
             =========================================================================================


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

</TABLE>
                                       11
<PAGE>

<TABLE>

                                           METROPOLITAN EDISON COMPANY

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                      Nov. 7 -     Jan. 1 -   For the Years Ended Dec. 31,
                                                                  Dec. 31, 2001  Nov. 6, 2001     2000         1999
-------------------------------------------------------------------------------------------------------------------------
-                                                                                      (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>         <C>           <C>        <C>
Net Income........................................................... $14,617 ||  $ 62,381      $ 81,895   $  95,123
Adjustments to reconcile net income to net                                    |
   cash from operating activities:                                            |
     Provision for depreciation and amortization.....................   8,903 |     51,867        68,695      88,989
     Nuclear fuel and lease amortization.............................   --    |      --            --         12,041
     Other amortization..............................................     154 |      1,147         5,684       2,586
     Impact of PPUC rate order, net..................................   --    |      --          (44,580)      --
     Deferred costs, net.............................................   1,045 |    (91,182)       (7,941)     (8,291)
     Deferred income taxes, net......................................     906 |     53,464        22,483     (66,995)
     Investment tax credits, net.....................................    (128)|       (721)         (851)    (12,146)
     Receivables.....................................................  10,213 |     33,714        33,348     (93,309)
     Materials and supplies..........................................   --    |      --            --         36,944
     Accounts payable................................................  (4,339)|    (60,868)      (48,395)    (23,039)
     Other...........................................................   8,286 |    (59,313)      (25,896)   (137,153)
                                                                      ------- |   --------      --------    --------
       Net cash provided from (used for) operating activities........  39,657 |     (9,511)       84,442    (105,250)
                                                                      ------- |   --------      --------    --------
                                                                              |
CASH FLOWS FROM FINANCING ACTIVITIES:                                         |
New Financing-                                                                |
     Long-term debt..................................................   --    |     99,500         --          --
     Short-term borrowings, net......................................   --    |     51,400        46,600       --
     Company-obligated trust preferred securities....................   --    |      --            --         96,535
     Contributions from parent.......................................   --    |      --            --         30,000
Redemptions and Repayments-                                                   |
     Preferred stock.................................................   --    |      --            --         12,598
     Long-term debt..................................................   --    |      --           50,000      30,024
     Short-term borrowings, net......................................  25,989 |      --            --         79,540
     Capital lease principal payments................................   --    |      --            --         15,786
     Company-obligated mandatorily redeemable                                 |
         preferred securities........................................   --    |      --            --        100,000
Dividend Payments-                                                            |
     Common stock....................................................   --    |     65,000        25,000     315,000
     Preferred stock.................................................   --    |      --            --             66
                                                                      ------- |   --------      --------    --------
       Net cash used for (provided from) financing activities........  25,989 |    (85,900)       28,400     426,479
                                                                      ------- |  ---------     ---------   ---------
                                                                              |
CASH FLOWS FROM INVESTING ACTIVITIES:                                         |
Property additions...................................................   7,787 |     47,660        58,481      66,388
Contributions to decommissioning trusts..............................   --    |      7,113         8,700      33,556
Sale of investments..................................................   --    |      --           (3,519)   (641,273)
Other................................................................     453 |      5,209         --             45
                                                                      ------- |   --------      --------    --------
       Net cash used for (provided from) investing activities........   8,240 |     59,982        63,662    (541,284)
                                                                      ------- |   --------      --------    --------
Net increase (decrease) in cash and cash equivalents.................   5,428 |     16,407        (7,620)      9,555
Cash and cash equivalents at beginning of period.....................  19,846 |      3,439        11,059       1,504
                                                                      ------- |   --------      --------    --------
Cash and cash equivalents at end of period........................... $25,274 |   $ 19,846      $  3,439    $ 11,059
                                                                      ======= |   ========      ========    ========
                                                                              |
SUPPLEMENTAL CASH FLOWS INFORMATION:                                          |
Cash Paid During the Year-                                                    |
     Interest (net of amounts capitalized)........................... $  -    |   $ 41,473      $ 47,451    $ 55,011
                                                                      ======= |   ========      ========    ========
     Income taxes (refund)..........................................  $(2,990)|   $  7,486      $ 45,534    $120,277
                                                                      ======= |   =========     ========    ========


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

</TABLE>
                                       12
<PAGE>

<TABLE>

                                           METROPOLITAN EDISON COMPANY

                                        CONSOLIDATED STATEMENTS OF TAXES

<CAPTION>
                                                                      Nov. 7 -      Jan. 1 -   For the Years Ended Dec.31,
                                                                  Dec. 31, 2001   Nov. 6, 2001      2000       1999
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (In thousands)
GENERAL TAXES:
<S>                                                                 <C>           <C>           <C>         <C>
Real and personal property......................................... $       5  |  $  1,236      $   1,826   $  3,979
State gross receipts...............................................     5,730  |    31,353         35,288     26,757
Social security and unemployment...................................        (1) |        14          --           171
Other..............................................................       775  |     7,242          5,509      8,376
                                                                    ---------  |  --------      ---------   --------
       Total general taxes......................................... $   6,509  |  $ 39,845      $  42,623   $ 39,283
                                                                    =========  |  ========      ========    ========
                                                                               |
PROVISION FOR INCOME TAXES:                                                    |
Currently payable-                                                             |
   Federal......................................................... $   7,693  |  $(11,534)     $  17,080   $107,335
   State...........................................................     2,433  |    (1,760)         5,377     33,202
                                                                    ---------  |  --------      ---------   --------
                                                                       10,126  |   (13,294)        22,457    140,537
                                                                    ---------  |  --------      ---------   --------
Deferred, net-                                                                 |
   Federal.........................................................       934  |    41,297         19,476    (46,758)
   State...........................................................       (28) |    12,167          3,007    (20,237)
                                                                    ---------  |  --------      ---------   --------
                                                                          906  |    53,464         22,483    (66,995)
                                                                    ---------  |  --------      ---------   --------
Investment tax credit amortization.................................      (128) |      (721)          (851)   (12,146)
                                                                    ---------  |  --------      ---------   --------
       Total provision for income taxes............................ $  10,904  |  $ 39,449      $  44,089   $ 61,396
                                                                    =========  |  ========      =========   ========
                                                                               |
INCOME STATEMENT CLASSIFICATION                                                |
OF PROVISION FOR INCOME TAXES:                                                 |
Operating income................................................... $  11,584  |  $ 28,549      $  33,278   $ 58,937
Other income.......................................................      (680) |    10,900         10,811      2,459
                                                                    ---------- |  --------      ---------   --------
       Total provision for income taxes............................ $  10,904  |  $ 39,449      $  44,089   $ 61,396
                                                                    =========  |  ========      =========   ========
                                                                               |
RECONCILIATION OF FEDERAL INCOME TAX                                           |
EXPENSE AT STATUTORY RATE TO TOTAL                                             |
PROVISION FOR INCOME TAXES:                                                    |
Book income before provision for income taxes...................... $  25,521  |  $101,831      $ 125,983   $156,520
                                                                    =========  |  ========      =========   ========
Federal income tax expense at statutory rate....................... $   8,932  |  $ 35,641      $  44,094   $ 54,782
Increases (reductions) in taxes resulting from-                                |
   Amortization of investment tax credits..........................      (128) |      (721)          (851)   (12,145)
   Depreciation....................................................       304  |       926            300      7,152
   State income tax, net of federal tax............................       938  |     7,388          7,379     10,257
   Allocated share of consolidated tax savings.....................     --     |    (3,151)         --        (1,100)
   Other, net......................................................       858  |      (634)        (6,833)     2,450
                                                                    ---------  |  --------      ---------   --------
       Total provision for income taxes............................ $  10,904  |  $ 39,449      $  44,089   $ 61,396
                                                                    =========  |  ========      =========   ========
                                                                               |
ACCUMULATED DEFERRED INCOME TAXES AT                                           |
DECEMBER 31:                                                                   |
Property basis differences......................................... $ 211,394  |                $ 203,352   $210,673
Nuclear decommissioning............................................    (5,623) |                   (9,797)    (1,501)
Deferred sale and leaseback costs..................................   (12,077) |                  (11,298)   (13,491)
Non-utility generation costs.......................................    36,099  |                   12,238      8,787
Purchase accounting basis difference...............................   (37,143) |                    --         --
Regulatory transition charge.......................................    85,414  |                   69,828     20,946
Customer receivables for future income taxes.......................    49,755  |                   51,247     48,815
Other..............................................................   (27,381) |                  (36,561)   (21,565)
                                                                    ---------  |                ---------   --------
       Net deferred income tax liability........................... $ 300,438  |                $ 279,009   $252,664
                                                                    =========  |                =========   ========


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

</TABLE>

                                       13

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

          The consolidated financial statements include Metropolitan Edison
Company (Company) and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated. The Company is a wholly owned
subsidiary of FirstEnergy Corp. FirstEnergy also holds directly all of the
issued and outstanding common shares of Ohio Edison Company (OE), The Cleveland
Electric Illuminating Company (CEI), The Toledo Edison Company (TE), American
Transmission Systems, Inc. (ATSI), Jersey Central Power & Light Company (JCP&L)
and Pennsylvania Electric Company (Penelec). The Company, JCP&L and Penelec were
formerly wholly owned subsidiaries of GPU, Inc., which merged with FirstEnergy
on November 7, 2001. Pre-merger period and post-merger period financial results
are separated by a heavy black line.

        The Company follows the accounting policies and practices  prescribed by
the  Pennsylvania  Public  Utility  Commission  (PPUC)  and the  Federal  Energy
Regulatory  Commission  (FERC).  The  preparation  of  financial  statements  in
conformity with accounting  principles  generally  accepted in the United States
(GAAP)  requires  management to make periodic  estimates  and  assumptions  that
affect the reported  amounts of assets,  liabilities,  revenues and expenses and
disclosure of contingent  assets and  liabilities.  Actual  results could differ
from these  estimates.  Certain  prior year  amounts have been  reclassified  to
conform with the current year presentation.

     REVENUES-

        The  Company's  principal  business  is  providing  electric  service to
customers in Pennsylvania. The Company's retail customers are metered on a cycle
basis.  Revenue is recognized for unbilled  electric  service through the end of
the year.

        Receivables from customers include sales to residential,  commercial and
industrial  customers  and sales to wholesale  customers.  There was no material
concentration  of receivables  as of December 31, 2001 or 2000,  with respect to
any particular segment of the Company's customers.

     REGULATORY PLAN-

      Pennsylvania enacted its electric utility competition law in 1996 with the
phase-in of customer choice for generation  suppliers completed as of January 1,
2001.  The PPUC  authorized  a rate  restructuring  plan for the Company in 1998
which  essentially  resulted in the  deregulation  of the  Company's  generation
business. The Company has a continuing  responsibility to provide power to those
customers not choosing to receive  power from an  alternative  energy  supplier,
subject to certain  limits,  which is referred to as the  Company's  provider of
last resort (PLR) obligation.

        In 2000,  the PPUC  disallowed  a portion  of the  requested  additional
stranded  costs  above  those  amounts   granted  in  the  Company's  1998  rate
restructuring  plan order.  The PPUC  required the Company to seek an IRS ruling
regarding the return of certain  unamortized  investment  tax credits and excess
deferred  income  tax  benefits  to  ratepayers.  If the IRS  ruling  ultimately
supports  returning  these tax benefits to  ratepayers,  the Company  would then
reduce  stranded  costs by $12 million plus interest and record a  corresponding
charge to income.

        As a result of its generating  asset  divestitures,  the Company obtains
its  supply of  electricity  to meet its PLR  obligation  almost  entirely  from
contracted and open market purchases. During 2000, the Company's purchased power
costs  substantially  exceeded  the  amounts it could  recover  under its capped
generation rates, which are in effect for varying periods,  pursuant to its 1998
rate restructuring plan. In November 2000, the Company filed a petition with the
PPUC seeking  permission to defer for future recovery its energy costs in excess
of amounts  reflected in its capped  generation rates. In January 2001, the PPUC
consolidated  this petition with the FirstEnergy and GPU merger  proceeding (see
Note 2 - Merger) for  consideration and resolution in accordance with the merger
procedural schedule.

        In June 2001, the Company entered into a Settlement Stipulation with all
of the major parties in the combined merger and rate relief  proceedings,  that,
in addition to resolving  certain issues  concerning the PPUC's  approval of the
merger,  also addressed the Company's  request for PLR relief. On June 20, 2001,
the PPUC entered orders approving the Settlement Stipulation, which approved the
merger and  provided  PLR relief.  The Company is  permitted to defer for future
recovery the difference  between its actual energy costs and those  reflected in
its capped generation rates, retroactive to January 1, 2001. Deferral accounting
will continue for such cost  differences  through  December 31, 2005 and, should
energy  costs  incurred  by the  Company  during that period be below its capped
generation  rates,  the  difference  would  be used to  reduce  its  recoverable
deferred costs.  The Company's PLR obligation has been extended through December
31, 2010.  The Company's  competitive  transition  charge (CTC) revenues will be
applied first to PLR costs,  then to stranded  costs other than for  non-utility
generation  (NUG) and finally to NUG stranded  costs through  December 31, 2010.
The Company would be permitted to recover any remaining stranded costs through a
continuation  of the CTC after December 31, 2010;  however,  such recovery would
extend to no later than  December  31,  2015.  Any  amounts  not  expected to be
recovered by December 31, 2015 would be written off at the time such nonrecovery
becomes probable.

                                       14
<PAGE>

        Several  parties had filed  Petitions  for Review with the  Commonwealth
Court of  Pennsylvania  regarding the PPUC's  orders.  On February 21, 2002, the
Court affirmed the PPUC decision regarding approval of the merger, remanding the
decision to the PPUC only with respect to the issue of merger savings. The Court
reversed the PPUC's decision regarding the Company's PLR obligation,  and denied
the Company's  related requests for rate relief.  The Company is considering its
response to the Court's  decision,  which could include asking the  Pennsylvania
Supreme  Court to review the  decision.  The  Company  is unable to predict  the
outcome of these matters.

        The application of Statement of Financial  Accounting  Standards  (SFAS)
No.  71,  "Accounting  for the  Effects  of Certain  Types of  Regulation,"  was
discontinued in 1998 with respect to the Company's  generation  operations.  The
Company  subsequently  divested  substantially all of its generating assets. The
Securities and Exchange Commission issued interpretive  guidance regarding asset
impairment  measurement,  concluding that any supplemental  regulated cash flows
such as a CTC should be  excluded  from the cash flows of assets in a portion of
the business not subject to regulatory accounting practices. If those assets are
impaired,  a regulatory asset should be established if the costs are recoverable
through  regulatory cash flows. Net assets included in utility plant relating to
the operations for which the  application of SFAS 71 was  discontinued  were $18
million as of December  31, 2001.  All of the  Company's  regulatory  assets are
expected  to  continue  to  be  recovered  under  provisions  of  the  Company's
regulatory orders.


     PROPERTY, PLANT AND EQUIPMENT-

          As a result of the merger, certain of the Company's property, plant
and equipment have been adjusted to reflect fair value. The majority of the
Company's property, plant and equipment is reflected at original cost since such
assets remain subject to rate regulation on a historical cost basis.

        The  Company  provides  for  depreciation  on a  straight-line  basis at
various rates over the estimated lives of property included in plant in service.
The annualized  composite rate was approximately  3.0% in 2001, 2.9% in 2000 and
3.0% in 1999.

        Annual depreciation expense in 2001 included approximately $11.1 million
for future decommissioning costs applicable to the Company's ownership in Unit 2
of the Three Mile Island Nuclear Plant (TMI-2), a demonstration  nuclear reactor
owned by a wholly owned subsidiary of the Company (in conjunction with JCP&L and
Penelec) and  decommissioning  liabilities for its previously  divested  nuclear
generating  units. The Company's share of the future  obligation to decommission
these units is approximately $254.5 million in current dollars and (using a 4.0%
escalation rate) approximately  $421.9 million in future dollars.  The estimated
obligation  and the  escalation  rate  were  developed  based  on site  specific
studies.  Decommissioning of the demonstration nuclear reactor is expected to be
completed in 2003;  payments for  decommissioning of TMI-2 are expected to begin
in 2014, when actual  decommissioning work is expected to begin. The Company has
recovered  approximately  $54 million for  decommissioning  through its electric
rates from customers  through December 31, 2001. The Company has also recognized
an estimated  liability of approximately $4.6 million related to decontamination
and  decommissioning  of nuclear  enrichment  facilities  operated by the United
States Department of Energy, as required by the Energy Policy Act of 1992.

        In July 2001,  the Financial  Accounting  Standards  Board (FASB) issued
SFAS 143,  "Accounting  for Asset  Retirement  Obligations."  The new  statement
provides  accounting  treatment  for  retirement   obligations  associated  with
tangible  long-lived  assets with adoption  required as of January 1, 2003. SFAS
143  requires  that  the  fair  value of a  liability  for an  asset  retirement
obligation  be recorded in the period in which it is  incurred.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
long-lived  asset.  Over  time the  capitalized  costs are  depreciated  and the
present value of the asset retirement liability increases, resulting in a period
expense. Upon retirement, a gain or loss will be recorded if the costs to settle
the  retirement  obligation  differs  from the  carrying  amount.  Under the new
standard,  additional  assets and  liabilities  relating  principally to nuclear
decommissioning obligations will be recorded, the pattern of expense recognition
will change and income from the external decommissioning trusts will be recorded
as investment  income.  The Company is currently  assessing the new standard and
has not yet quantified the impact on its financial statements.


     INCOME TAXES-

        Details  of the  total  provision  for  income  taxes  are  shown on the
Consolidated  Statements  of Taxes.  Deferred  income  taxes  result from timing
differences  in the  recognition of revenues and expenses for tax and accounting
purposes.  Investment tax credits,  which were deferred when utilized, are being
amortized over the recovery period of the related property. The liability method
is used to account for deferred  income taxes.  Deferred  income tax liabilities
related to tax and accounting basis  differences are recognized at the statutory
income tax rates in effect when the liabilities are expected to be paid. Results
for the period  January 1, 2001  through  November  6, 2001 are  included in the
final consolidated  federal income tax return of GPU, and results for the period
November 7, 2001 through  December 31, 2001 are included in  FirstEnergy's  2001
consolidated  federal income tax return.  In both cases,  the  consolidated  tax
liability  is  allocated  on a  "stand-alone"  company  basis,  with the Company
recognizing  the tax benefit for any tax losses or credits it contributed to the
consolidated return.

                                       15

<PAGE>

     RETIREMENT BENEFITS-

          Effective December 31, 2001, the Company's defined benefit pension
plan was merged into FirstEnergy's defined benefit pension plan. FirstEnergy's
trusteed, noncontributory defined benefit pension plan covers almost all of the
Company's full-time employees. Upon retirement, employees receive a monthly
pension based on length of service and compensation. On December 31, 2001, the
GPU pension plans were merged with the FirstEnergy plan. FirstEnergy uses the
projected unit credit method for funding purposes. The assets of the pension
plan consist primarily of common stocks, United States government bonds and
corporate bonds. The FirstEnergy and GPU postretirement benefit plans are
currently separately maintained; the information shown below is aggregated as of
December 31, 2001. Costs for the year 2001 include the former GPU companies'
pension and other postretirement benefit costs for the period November 7, 2001
through December 31, 2001.

        The Company provides a minimum amount of noncontributory  life insurance
to retired employees in addition to optional contributory insurance. Health care
benefits,  which include certain employee  deductibles and copayments,  are also
available  to  retired   employees,   their   dependents   and,   under  certain
circumstances,  their survivors.  The Company pays insurance premiums to cover a
portion of these benefits in excess of set limits;  all amounts up to the limits
are paid by the Company.  The Company  recognizes the expected cost of providing
other  postretirement  benefits to employees and their beneficiaries and covered
dependents  from the time  employees  are hired  until they  become  eligible to
receive those benefits.

        The  following  sets  forth the funded  status of the plans and  amounts
recognized on FirstEnergy's Consolidated Balance Sheet as of December 31, 2001:

                                                                  Other
                                       Pension Benefits  Postretirement Benefits
                                       ----------------  -----------------------
                                                   (In millions)
     Change in benefit obligation:
     Benefit obligation as of
       January 1.........................   $1,506.1          $   752.0
     Service cost........................       34.9               18.3
     Interest cost.......................      133.3               64.4
     Plan amendments.....................        3.6                --
     Actuarial loss......................      123.1               73.3
     Voluntary early retirement program..        --                 2.3
     GPU acquisition.....................    1,878.3              716.9
     Benefits paid.......................     (131.4)             (45.6)
     ---------------------------------------------------------------------------
     Benefit obligation as of December 31    3,547.9            1,581.6
     ---------------------------------------------------------------------------

     Change in plan assets:
     Fair value of plan assets
       as of January 1...................    1,706.0               23.0
     Actual return on plan assets........        8.1               12.7
     Company contribution................        --                43.3
     GPU acquisition.....................    1,901.0              462.0
     Benefits paid.......................     (131.4)              (6.0)
     ---------------------------------------------------------------------------
     Fair value of plan assets as of
       December 31.......................    3,483.7              535.0
     ---------------------------------------------------------------------------

     Funded status of plan...............      (64.2)          (1,046.6)
     Unrecognized actuarial loss (gain)..      222.8              212.8
     Unrecognized prior service cost.....       87.9               17.7
     Unrecognized net transition
       obligation (asset)................        --               101.6
     ---------------------------------------------------------------------------
     Prepaid (accrued) benefit cost         $  246.5          $  (714.5)
     ===========================================================================

     Assumptions used as of
       December 31, 2001:
     Discount rate.......................       7.25%              7.25%
     Expected long-term return on
       plan assets.......................      10.25%             10.25%
     Rate of compensation increase.......       4.00%              4.00%


        FirstEnergy's net pension and other postretirement benefit costs for the
year ended December 31, 2001 were computed as follows:

                                                                Other
                                        Pension Benefits Postretirement Benefits
                                        ---------------- -----------------------
                                                    (In millions)
     Service cost........................   $   34.9            $18.3
     Interest cost.......................      133.3             64.4
     Expected return on plan assets......     (204.8)            (9.9)
     Amortization of transition
       obligation (asset)................       (2.1)             9.2
     Amortization of prior service cost..        8.8              3.2
     Recognized net actuarial
       loss (gain).......................        --               4.9
     Voluntary early retirement program..        6.1              2.3
     ---------------------------------------------------------------------------
     Net benefit cost....................    $ (23.8)           $92.4
     ===========================================================================

        The composite health care trend rate assumption is approximately  10% in
2002,  9% in 2003 and 8% in 2004,  trending  to  4%-6% in later  years.  Assumed
health  care cost trend rates have a  significant effect on the amounts reported

                                       16
<PAGE>

for the health care plan.  An increase in the health care trend rate  assumption
by one percentage point would increase  FirstEnergy's total service and interest
cost components by $14.6 million and the  postretirement  benefit  obligation by
$151.2 million.  A decrease in the same assumption by one percentage point would
decrease the total service and interest cost components by $12.7 million and the
postretirement benefit obligation by $131.3 million.

Pre-Merger

        As of December 31, 2000,  the Company had on its balance  sheet  accrued
benefit costs of $0.9 million and $0.4 million, respectively, related to pension
and other postretirement  benefit obligations.  In addition,  for the year ended
December 31, 2000, the Company recognized in income net benefit  costs/(credits)
of  $0.1  million  and  $0.2  million,   respectively,  for  pension  and  other
postretirement  benefits,  and for the year ended December 31, 1999, the Company
recognized  net  benefit  costs/(credits)  of $0.2  million  and  $0.3  million,
respectively.


     TRANSACTIONS WITH AFFILIATED COMPANIES-

        During the three years ended  December 31, 2001,  GPU Service,  Inc., an
affiliated company, provided legal, accounting,  financial and other services to
the Company. In addition,  prior to the sales of the Company's generating assets
in 1999,  affiliated  companies  GPU  Nuclear,  Inc.  and GPU  Generation,  Inc.
conducted  generation  operations  for the  company.  The total cost of services
rendered by affiliates  was $141  million,  $99 million and $350 million for the
years 2001,  2000 and 1999,  respectively.  Of these amounts,  $95 million,  $77
million and $264  million  were  charged to income for the years 2001,  2000 and
1999, respectively.


     SUPPLEMENTAL CASH FLOWS INFORMATION-

        All temporary cash  investments  purchased  with an initial  maturity of
three  months  or less are  reported  as cash  equivalents  on the  Consolidated
Balance Sheets at cost, which approximates their fair market value.

        All borrowings with initial maturities of less than one year are defined
as financial instruments under GAAP and are reported on the Consolidated Balance
Sheets at cost, which  approximates  their fair market value. The following sets
forth the  approximate  fair  value and  related  carrying  amounts of all other
long-term debt,  preferred stock subject to mandatory redemption and investments
other than cash and cash equivalents as of December 31:

                                          2001                  2000
     ---------------------------------------------------------------------
                                    Carrying  Fair          Carrying Fair
                                     Value   Value           Value   Value
     ---------------------------------------------------------------------
                                                 (In millions)
     Long-term debt.................    $597  $601           $497    $504
     Preferred stock................    $100  $ 93           $100    $ 97
     Investments other than cash
        and cash equivalents........    $159  $160           $156    $156
     ---------------------------------------------------------------------
                                        $848  $854           $753    $757
     =====================================================================


        The fair  values of  long-term  debt and  preferred  stock  reflect  the
present value of the cash  outflows  relating to those  securities  based on the
current  call  price,  the yield to  maturity  or the  yield to call,  as deemed
appropriate at the end of each respective year. The yields assumed were based on
securities  with similar  characteristics  offered by  corporations  with credit
ratings  similar to the Company's  ratings.  Long-term debt and preferred  stock
subject to mandatory redemption were recognized at fair value in connection with
the merger.

        The fair  value of  investments  other  than  cash and cash  equivalents
represent cost (which  approximates fair value) or the present value of the cash
inflows  based on the  yield to  maturity.  The  yields  assumed  were  based on
financial instruments with similar characteristics and terms.  Investments other
than  cash and  cash  equivalents  include  decommissioning  trust  investments.
Unrealized gains and losses applicable to the  decommissioning  trusts have been
recognized  in  the  trust  investment  with  a  corresponding   change  to  the
decommissioning  liability.  The  Company  has no  securities  held for  trading
purposes.

        On  January 1, 2001,  the  Company  adopted  SFAS 133,  "Accounting  for
Derivative  Instruments  and  Hedging  Activities,"  as  amended  by  SFAS  138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities --
an  amendment  of  FASB  Statement  No.  133."  The  adoption  resulted  in  the
recognition of derivative assets on the Consolidated Balance Sheet at January 1,
2001 in the amount of $13.0  million,  with a  substantially  offsetting  amount
recorded  in  Regulatory  Assets of $12.2  million.  As of January  1,  2001,  a
cumulative  effect of  accounting  change was  recognized as an expense in Other
Income (Deductions),  Net on the Consolidated  Statement of Income in the amount
of $0.1 million.

                                       17
<PAGE>

        The Company is exposed to financial risks resulting from the fluctuation
of  commodity  prices,  including  electricity  and  natural  gas. To manage the
volatility relating to these exposures, the Company uses a variety of derivative
instruments, including options and futures contracts. These derivatives are used
principally  for  hedging  purposes.  FirstEnergy  has a Risk  Policy  Committee
comprised of executive  officers,  which exercises an independent risk oversight
function to ensure  compliance  with  corporate  risk  management  policies  and
prudent risk management practices.

          The Company uses derivatives to hedge the risk of price fluctuations.
The Company's primary ongoing hedging activity involves cash flow hedges of
electricity and natural gas purchases. The majority of the Company's forward
commodity contracts are considered "normal purchases and sales," as defined by
SFAS 133, and are therefore excluded from the scope of SFAS 138. The options and
futures contracts determined to be within the scope of SFAS 133 are accounted
for as cash flow hedges and expire on various dates through 2002. Gains and
losses from hedges of commodity price risks are included in net income when the
underlying hedged commodities are delivered. There is currently a net deferred
loss of $0.01 million included in Accumulated Other Comprehensive Loss as of
December 31, 2001 related to derivative hedging activity, which will be
reclassified to earnings during the next twelve months as hedged transactions
occur.

     REGULATORY ASSETS-

        The Company recognizes,  as regulatory assets,  costs which the FERC and
PPUC have authorized for recovery from customers in future periods. Without such
authorization,  the costs  would have been  charged to income as  incurred.  All
regulatory  assets are expected to continue to be recovered from customers under
the  Company's  regulatory  plan.  The  Company  continues  to bill and  collect
cost-based rates for its transmission  and distribution  services,  which remain
regulated;  accordingly,  it is  appropriate  that  the  Company  continues  the
application of SFAS 71 to those operations.


        Net regulatory  assets on the Consolidated  Balance Sheets are comprised
of the following:

                                                          2001         2000
        ----------------------------------------------------------------------
                                                            (In millions)

        Regulatory transition charge................... $1,115.9     $1,053.1
        Customer receivables for future income taxes...    110.9        114.5
        Nuclear decommissioning costs..................     34.7         27.6
        Provider of last resort deferrals..............     32.7          --
        Employee postretirement benefit costs..........     21.4         23.4
        Loss on reacquired debt........................      4.8          5.3
        Other..........................................      --           0.5
        ----------------------------------------------------------------------
            Total...................................... $1,320.4     $1,224.4
        ======================================================================


2.   MERGER:

        On November 7, 2001, the merger of FirstEnergy and GPU became  effective
pursuant to the Agreement and Plan of Merger,  dated August 8, 2000. As a result
of the merger,  GPU's former wholly owned  subsidiaries,  including the Company,
became wholly owned subsidiaries of FirstEnergy.

          The merger was accounted for by the purchase method of accounting. The
assets acquired and liabilities assumed were recorded at estimated fair values
as determined by FirstEnergy's management based on information currently
available and on current assumptions as to future operations. Merger purchase
accounting adjustments recorded in the records of the Company primarily consist
of: (1) revaluation of certain property, plant and equipment; (2) adjusting
preferred stock subject to mandatory redemption and long-term debt to estimated
fair value; (3) recognizing additional obligations related to retirement
benefits; and (4) recognizing estimated severance and other compensation
liabilities. Other assets and liabilities were not adjusted since they remain
subject to rate regulation on a historical cost basis. The excess of the
purchase price over the estimated fair values of the assets acquired and
liabilities assumed was recognized as goodwill, which will not be amortized but
will be reviewed for impairment at least annually. As of December 31, 2001, the
Company had recorded goodwill of approximately $784.4 million related to the
merger.

3.   LEASES:

        Consistent  with  regulatory  treatment,  the  rentals  for  capital and
operating  leases  are  charged  to  operating   expenses  on  the  Consolidated
Statements of Income.  Prior to the sale of its nuclear  generating  facility in
December  1999, the Company's  capital lease  obligations  related  primarily to
nuclear fuel lease agreements with  nonaffiliated fuel trusts for the plant. The
Company's most significant  operating lease relates to the sale and leaseback of
a portion of its ownership interest in the Merrill Creek Reservoir project.  The
interest  element  related to this lease was $1.9 million for the years 2001 and
2000.

                                       18

<PAGE>


         As of December  31,  2001,  the future  minimum  lease  payments on the
Company's Merrill Creek operating lease, net of reimbursements  from sublessees,
are: $0.4 million in 2002,  $1.3 million in 2003,  zero in 2004, $0.2 million in
2005 and in 2006,  and $15.0  million for the years  thereafter.  The  Company's
Merrill  Creek lease  payments  were offset  against the actual net  divestiture
proceeds received from the 1999 sales of its generating assets.


4.   CAPITALIZATION:

     (A)  RETAINED EARNINGS-

        The  merger  purchase  accounting  adjustments  included  resetting  the
retained earnings balance to zero at the November 7, 2001 merger date.

        In general,  the Company's first mortgage bond (FMB) indentures restrict
the payment of dividends or  distributions  on or with respect to the  Company's
common stock to amounts credited to earned surplus since  approximately the date
of its indenture. At such date, the Company had a balance of $3.4 million in its
earned  surplus  account,  which would not be available  for  dividends or other
distributions.  As of December  31,  2001,  the Company  had  retained  earnings
available  to pay  common  stock  dividends  of $11.2  million,  net of  amounts
restricted under the Company's FMB indentures.


     (B)  PREFERRED AND PREFERENCE STOCK-

        The  Company's  preferred  stock  authorization  consists  of 10 million
shares without par value. No preferred shares are currently outstanding.


     (C)  COMPANY-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES OF
          SUBSIDIARY TRUST HOLDING SOLELY PARTNERSHIP PREFERRED SECURITIES-

        The Company has formed a statutory business trust, Met-Ed Capital Trust,
which is owned through a wholly-owned limited partnership of the Company, Met-Ed
Capital II, L.P., of which a wholly-owned  subsidiary of the Company is the sole
general partner.  In this  transaction,  Met-Ed Capital Trust invested the gross
proceeds from the sale of $100.0 million of its 7.35% trust preferred securities
in the preferred  securities of Met-Ed Capital II, L.P.,  which in turn invested
those  proceeds  in  $103.1  million  of 7.35%  subordinated  debentures  of the
Company. The sole assets of Met-Ed Capital Trust are the preferred securities of
Met-Ed  Capital  II,  L.P.,  whose sole  assets are the  Company's  subordinated
debentures with the same rate and maturity date as the preferred securities. The
Company  has  effectively  provided a full and  unconditional  guarantee  of its
obligations  under  its  trust's  preferred  securities.   The  trust  preferred
securities,  which  mature in 2039 and have a  liquidation  value of $25.00  per
security,  are redeemable at the option of the Company  beginning in May 2004 at
100% of their principal amount. The interest on the subordinated debentures (and
therefore the distributions on the preferred  securities) may be deferred for up
to 60 months,  but the Company may not pay  dividends  on, or redeem or acquire,
any of its cumulative  preferred or common stock until deferred  payments on its
subordinated debentures are paid in full.


     (D)  LONG-TERM DEBT-

        The first mortgage indentures and their supplements, which secure all of
the Company's FMBs,  serve as direct first mortgage liens on  substantially  all
property and franchises, other than specifically excepted property, owned by the
Company.

        Based  on the  amount  of bonds  authenticated  by the  Trustee  through
December  31,  2001,  the  Company's   annual  sinking  and   improvement   fund
requirements for all bonds issued under the mortgage amount to $6.7 million. The
Company  expects to fulfill its  sinking  and  improvement  fund  obligation  by
providing bondable property additions to the Trustee.

        Sinking  fund   requirements  for  FMBs  and  maturing   long-term  debt
(excluding capital leases) for the next five years are:

                                    (In millions)
                          ----------------------
                           2002........ $ 30.1
                           2003........   90.5
                           2004........   40.5
                           2005........   50.5
                           2006........  150.5
                          ----------------------

        The Company's  obligations to repay certain  pollution  control  revenue
bonds are secured by several series of FMBs.  Certain  pollution control revenue
bonds are  entitled to the benefit of  noncancelable  municipal  bond  insurance
policies of $42.2  million to pay  principal  of, or interest on, the  pollution
control revenue bonds.

                                       19
<PAGE>

     (E)  COMPREHENSIVE INCOME-

        Comprehensive income includes net income as reported on the Consolidated
Statements of Income and all other changes in common stockholder's equity except
those resulting from  transactions with the Company's parent. As of December 31,
2001,  accumulated other comprehensive income consisted of an unrealized gain on
investment  of securities  available  for sale of $0.02  million and  unrealized
losses on derivative instrument hedges of $0.01 million.


5.   SHORT-TERM BORROWINGS:

        The Company may borrow from its affiliates on a short-term  basis. As of
December 31, 2001,  the Company had total  short-term  borrowings of $72 million
from its affiliates with a weighted average interest rate of approximately 4.9%.


6.   COMMITMENTS, GUARANTEES AND CONTINGENCIES:

     CAPITAL EXPENDITURES-

        The Company's  current forecast  reflects  expenditures of approximately
$323 million for property  additions and improvements  from 2002-2006,  of which
approximately $66 million is applicable to 2002.


     NUCLEAR INSURANCE-

        The  Price-Anderson Act limits the public liability relative to a single
incident at a nuclear  power plant to $9.5  billion.  The amount is covered by a
combination  of private  insurance  and an industry  retrospective  rating plan.
Based on its present ownership interest in TMI-2, the Company is exempt from any
potential assessment under the industry retrospective rating plan.

        The Company is also  insured as to its  interest in TMI-2 under a policy
issued to the operating company for the plant.  Under this policy,  $150 million
is provided for property damage and decontamination  and decommissioning  costs.
Under this policy,  the Company can be assessed a maximum of approximately  $0.4
million for incidents at any covered nuclear facility  occurring during a policy
year which are in excess of  accumulated  funds  available  to the  insurer  for
paying losses.

        The  Company  intends to maintain  insurance  against  nuclear  risks as
described above as long as it is available.  To the extent that property damage,
decontamination,  decommissioning,  repair and replacement  costs and other such
costs  arising from a nuclear  incident at TMI-2 exceed the policy limits of the
insurance in effect with respect to that plant, to the extent a nuclear incident
is determined not to be covered by the Company's insurance  policies,  or to the
extent such  insurance  becomes  unavailable  in the future,  the Company  would
remain at risk for such costs.


     ENVIRONMENTAL MATTERS-

        Various   environmental   liabilities   have  been   recognized  on  the
Consolidated  Balance  Sheet as of December 31, 2001,  based on estimates of the
total costs of cleanup,  the  Company's  proportionate  responsibility  for such
costs and the  financial  ability of other  nonaffiliated  entities to pay.  The
Company  has been  named as a  "potentially  responsible  party"  (PRP) at waste
disposal sites which may require cleanup under the  Comprehensive  Environmental
Response,  Compensation  and Liability Act of 1980.  Allegations  of disposal of
hazardous substances at historical sites, and the liability involved,  are often
unsubstantiated and subject to dispute. Federal law provides that all PRPs for a
particular  site be held  liable on a joint and several  basis.  The Company has
total accrued liabilities aggregating  approximately $0.1 million as of December
31, 2001. The Company does not believe environmental remediation costs will have
a material adverse effect on its financial  condition,  cash flows or results of
operations.


     OTHER LEGAL PROCEEDINGS-

        Various lawsuits, claims and proceedings related to the Company's normal
business  operations are pending  against the Company,  the most  significant of
which is described below.

        TMI-2, which was damaged during a 1979 accident, is jointly owned by the
Company,  JCP&L and Penelec, with the Company having a 50% ownership percentage.
Claims for alleged personal injury against the Company,  JCP&L,  Penelec and GPU
(the defendants)  were filed in the U.S.  District Court for the Middle District
of  Pennsylvania.  In 1996,  the  District  Court  granted a motion for  summary
judgment  filed by the  defendants  and  dismissed  the ten initial "test cases"
which had been  selected for a test case trial,  as well as all of the remaining
2,100 pending claims. In November

                                       20
<PAGE>

1999,  the U.S.  Court of Appeals for the Third  Circuit  affirmed  the District
Court's  dismissal of the ten "test  cases," but set aside the  dismissal of the
additional  pending  claims,  remanding  them to the District  Court for further
proceedings.  In September 2000, the defendants  filed for a summary judgment in
the District Court. Meanwhile,  the plaintiffs appealed to the Third Circuit for
a review of the District Court's  decision placing  limitations on the remaining
plaintiffs' suit. In April 2001, the Third Circuit affirmed the District Court's
decision.  In July  2001,  the  defendants  renewed  their  motion for a summary
judgment on the  remaining  2,100 claims in the District  Court.  On January 15,
2002,  the District  Court granted the  defendants'  amended  motion for summary
judgment.  On  February  14,  2002,  plaintiffs  filed a notice of appeal to the
United  States  Court of  Appeals  for the Third  Circuit.  In  addition  to the
approximately 2,100 claims for which summary judgment has been granted, there is
other pending  litigation  arising out of the TMI-2  accident.  This  litigation
consists  of  the  following:   eight  personal   injury  cases  that  were  not
consolidated with the  above-referenced  approximately  2,100 claims;  two class
actions brought on behalf of plaintiffs  alleging  additional injuries diagnosed
after the filing of the complaints in the above-referenced case; a case alleging
exposure  during the  post-accident  cleanup of the TMI-2  plant;  and claims by
individual  businesses  for economic  loss  resulting  from the TMI-2  accident.
Although unable to predict the outcome of this litigation,  the Company believes
that any liability to which it might be subject by reason of the TMI-2  accident
will not exceed its financial protection under the Price-Anderson Act.


7.   SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED):

        The  following  summarizes  certain  consolidated  operating  results by
quarter for 2001 and 2000.
<TABLE>
<CAPTION>

                                     Three Months Ended
                                -----------------------------
                                March 31, June 30,  Sept. 30,  Oct.1-Nov. 6  Nov. 7-Dec. 31
                                  2001      2001       2001         2001          2001
-------------------------------------------------------------------------------------------
                                                    (In millions)
<S>                              <C>       <C>        <C>          <C>          <C>
Operating Revenues............   $221.0    $222.6     $283.5       $97.5    |   $143.7
Operating Expenses and Taxes..    196.6     197.9      248.3        79.5    |    126.4
----------------------------------------------------------------------------|--------------
Operating Income..............     24.4      24.7       35.2        18.0    |     17.3
Other Income (Expense)........      4.7       5.3        2.6        (4.8)   |      5.5
Net Interest Charges..........     13.1      14.1       13.3         7.2    |      8.2
----------------------------------------------------------------- ----------|--------------
Net Income....................  $  16.0   $  15.9    $  24.5      $  6.0    |  $  14.6
===========================================================================================
</TABLE>


                                             Three Months Ended
                                -----------------------------------------
                                March 31, June 30,  Sept. 30,  Dec. 31,
                                  2000      2000      2000      2000
-------------------------------------------------------------------------
                                                (In millions)

Operating Revenues............   $203.0    $197.8    $227.5    $214.0
Operating Expenses and Taxes..    164.2     180.2     215.7     147.0
-------------------------------------------------------------------------
Operating Income..............     38.8      17.6      11.8      67.0
Other Income (Expense)........      1.8       4.8      (2.1)     (3.1)
Net Interest Charges..........     14.1      13.7      13.5      13.4
-------------------------------------------------------------------------
Net Income (Loss).............   $ 26.5    $  8.7    $ (3.8)   $ 50.5
=========================================================================

                                       21

<PAGE>

Report of Independent Public Accountants


To the Stockholders and Board of Directors of
Metropolitan Edison Company:

We have audited the  accompanying  consolidated  balance sheet and  consolidated
statement of  capitalization  of  Metropolitan  Edison  Company (a  Pennsylvania
corporation and wholly owned  subsidiary of FirstEnergy  Corp.) and subsidiaries
as of December 31, 2001 (post-merger),  and the related consolidated  statements
of income,  common stockholder's  equity,  preferred stock, cash flows and taxes
for the period from  January 1, 2001 to November  6, 2001  (pre-merger)  and the
period from November 7, 2001 to December 31, 2001 (post-merger). These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our  audit.  The  financial   statements  of  Metropolitan  Edison  Company  and
subsidiaries as of December 31, 2000 and for each of the two years in the period
ended  December  31, 2000  (pre-merger),  were audited by other  auditors  whose
report  dated  January  31,  2001,  expressed  an  unqualified  opinion on those
statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the 2001 financial statements referred to above present fairly,
in all material respects,  the financial position of Metropolitan Edison Company
and subsidiaries as of December 31, 2001 (post-merger), and the results of their
operations  and their cash flows for the period from January 1, 2001 to November
6, 2001  (pre-merger)  and the period from November 7, 2001 to December 31, 2001
(post-merger),  in conformity with accounting  principles  generally accepted in
the United States.



Arthur Andersen LLP

Cleveland, Ohio,
   March 18, 2002.

                                       22
<PAGE>


                      Report of Independent Accountants


To the Board of Directors and Stockholder of
Metropolitan Edison Company:

In our opinion,  the consolidated  balance sheet as of December 31, 2000 and the
related  consolidated  statements of income,  and cash flows for each of the two
years in the period ended December 31, 2000 (appearing on the accompanying index
of  the   Metropolitan   Edison  Company  2001  Annual  Report  to  Stockholders
incorporated  by reference in this Form 10-K)  present  fairly,  in all material
respects,  the  financial  position,  results  of  operations  and cash flows of
Metropolitan  Edison Company and  Subsidiary  Companies at December 31, 2000 and
for each of the two years in the period ended  December 31, 2000,  in conformity
with accounting  principles  generally accepted in the United States of America.
These financial  statements are the responsibility of the Company's  management;
our responsibility is to express an opinion on these financial  statements based
on our audits.  We conducted our audits of these  statements in accordance  with
auditing  standards  generally  accepted in the United States of America,  which
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.



PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
January 31, 2001

                                       23